New research suggests holiday lets aren’t responsible for the housing crisis.
Holiday lets are not the main cause of Britain’s housing affordability issues, a new report by accountancy firm EY has found. Despite rising property prices, currently averaging £290,000, the study claims there’s “little to no relationship” between the growth of holiday lets and the difficulties faced by those seeking to buy a home.
The report, commissioned by Airbnb, highlights the significant contribution of holiday lets to the UK economy. In the past year alone, Airbnb guests alone brought in a staggering £5.7 billion. EY argues that imposing restrictions on short-term lets could harm the tourism industry, particularly in areas where traditional tourist accommodations are limited.
These findings come amidst Labour’s proposed crackdown on holiday lets, empowering local councils in England to demand planning permission for properties in designated areas. This move, initially promised by the Conservatives, aims to establish a nationwide register for short-term lets.
Councils Take Action – Is It Enough?
Some local authorities are already flexing their muscles by increasing council tax on second homes, with some areas like Pembrokeshire implementing a 200% premium. While this has led to an exodus of second homeowners and impacted local tourism, the hope is that greater control over holiday lets will create more opportunities for first-time buyers struggling to get onto the property ladder.
However, EY’s analysis indicates that over 95% of the surge in rents and house prices between 2015 and 2022 stems from factors other than the rise of short-term lets. The primary driver, they argue, is the correlation between increasing incomes and rising rents and property prices.
Airbnb Impact: A Mixed Bag?
The report acknowledges that while there are isolated cases where a rise in Airbnb listings might have contributed to housing affordability challenges, the overall economic benefits often outweigh the drawbacks. For instance, in North Norfolk, the economic gain per household (£56/month) was four times greater than any potential negative impact on housing costs.
EY’s research reveals that in most areas, entire homes listed on Airbnb represent less than 0.5% of the total housing stock. However, in 25 areas, this figure exceeds 2%, showing a noticeable link between Airbnb growth and house price increases in places like Derbyshire Dales, Cornwall, Thanet, North Norfolk, and Kensington and Chelsea.
A Global Backlash Against Airbnb?
The debate surrounding Airbnb’s impact extends beyond the UK. Major cities like New York have implemented stringent restrictions on the company’s operations, while Lisbon has introduced strict licensing requirements. Barcelona has even proposed a complete ban on Airbnb rentals.
Despite the concerns, Airbnb maintains that the root cause of the housing shortage lies in insufficient house building. The company emphasizes that only a small fraction of British homes are listed on their platform, typically for a few days each month. Airbnb argues that this activity generates substantial economic benefits and supports numerous jobs across the UK.
As the debate over holiday lets continues, it remains to be seen how the government will balance the economic advantages of short-term rentals with the pressing need for affordable housing solutions.